Welcome!

News Feed Item

Allegion Reports First Quarter 2014 Financial Results; Affirms Previous Full-Year Guidance

Allegion plc (NYSE: ALLE), a leading global provider of security products and solutions, today reported first quarter 2014 net revenues of $472.5 million, down 0.2 percent compared to the prior year, and EPS from continuing operations of $0.37 per share.

Excluding the impact of one-time separation costs and other special items, net revenues increased 3.7 percent on an adjusted basis (up 3.0% on an organic basis). Adjusted EPS from continuing operations were $0.44 per share which is slightly down from prior year as favorable operating results, lower tax rate, and a prior-year one-time foreign exchange loss was more than offset by higher interest expense and investment.

For the first quarter of 2014, operating margin was 14.1 percent (16.1 percent on an adjusted basis). Operating margin in the first quarter of 2013 was 14.5 percent (16.1 percent on an adjusted basis). Adjusted operating margin was consistent year-over-year as favorable price, volume and productivity offset increased investments, inflation and unfavorable business mix.

“In the first quarter, we delivered solid results as all regions contributed to an increase of 3.7 percent in adjusted revenue,” said David D. Petratis, chairman, president and chief executive officer. “We continue to invest in our growth platform including electronic offerings, channel effectiveness and acquisitions.”

“Although first quarter weather disrupted economic activity and impacted commercial shipments, we compensated with continued residential growth. We still see opportunity in North America for full-year non-residential growth in the low to mid-single digits weighted to the second half of the year. And we continue to make progress in Europe to improve margin and operating performance,” Petratis added.

*Adjustments to GAAP revenue, operating margin, and EPS from continuing operations consist of items such as the impact of change in order flow through the Company's consolidated joint venture in Asia, restructuring charges, and one-time separation costs related to the spin-off from Ingersoll Rand to better illustrate year over year performance. Please see the disclosure below and the supplemental schedules attached to this earnings release for additional information regarding these adjustments.

Additional Items

Interest expense for the first quarter of 2014 was $12.7 million higher than the prior period due to $1.3 billion of additional indebtedness incurred as a result of the spin-off from Ingersoll Rand. The Company's effective tax rate for the first quarter of 2014 was 30.3%. The comparable effective tax rate for the first quarter of 2013 was 32.3%.

Cash Flow and Liquidity

Available cash flow was negative $10.1 million for first quarter 2014 reflecting normal seasonality. In first quarter 2013, available cash flow was negative $4.9 million. The year-over-year decrease in available cash flow reflects increased investment in capital projects and one-time separation costs. The Company ended first quarter 2014 with unrestricted cash of $205.4 million and total debt of $1,334.9 million, of which $40.1 million is collateralized by restricted cash of the same amount. The Company did not have any borrowings outstanding under its $500 million revolving credit facility at March 31, 2014.

Dividends

On April 9, 2014, Allegion's board of directors declared a quarterly dividend of $0.08 per ordinary share. The dividend is payable June 30, 2014, to shareholders of record June 16, 2014.

2014 Outlook

Allegion affirms previous guidance of adjusted EPS from continuing operations of $2.25 to $2.40 per share and GAAP reported EPS from continuing operations of $1.95 to $2.15. This guidance assumes full-year revenue growth of 0.9% to 1.9%, adjusted revenue growth of 3.5% to 4.5%, and restructuring and spin-off costs of $0.25 to $0.30 per share, net of tax. This guidance includes additional interest expense of $0.27 per share, net of tax, representing the full year impact of the additional indebtedness associated with the spin-off from Ingersoll Rand and assumes an effective tax rate of approximately 31%. The Company's 2014 guidance assumes the official exchange rate for the Venezuelan bolivar and does not take into consideration the impact of a potential currency devaluation in Venezuela. The Company continues to target available cash flow that approximates net earnings from continuing operations.

Conference Call Information

On Thursday, May 1, David D. Petratis, chairman, president and chief executive officer, and Patrick Shannon, senior vice president and chief financial officer, will conduct a conference call for analysts and investors, beginning at 8:00 a.m. E.T., to review the Company's results.

A real-time, listen-only webcast of the conference call will be broadcast live over the Internet. Individuals wishing to listen can access the call through the Company's website at http://investor.allegion.com.

About Allegion

Allegion (NYSE: ALLE) creates peace of mind by pioneering safety and security. As a $2 billion provider of security solutions for homes and businesses, Allegion employs more than 8,000 people and sells products in more than 120 countries across the world. Allegion comprises 27 global brands, including strategic brands CISA®, Interflex®, LCN®, Schlage® and Von Duprin®.

For more, visit http://www.allegion.com.

Non-GAAP Measures

The Company has presented revenue, operating income, operating margin, EBITDA, EBITDA margin, earnings from continuing operations, and diluted earnings per share (EPS) from continuing operations on both a U.S. GAAP basis and on an adjusted basis because the Company's management believes it may assist investors in evaluating the Company's on-going operations as a standalone company. The Company believes these non-GAAP disclosures provide important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. Investors should not consider these non-GAAP measures as alternatives to the related GAAP measures. A reconciliation of the non-GAAP measures used to their most directly comparable GAAP measure is presented as a supplemental schedule to this earnings release.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's 2014 financial performance, the Company's growth strategy, the Company's capital allocation strategy, the Company's Europe, Middle East, India and Africa (EMEIA) strategy and the strength of the markets in which the Company operates. These forward-looking statements are based on the Company's current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Further information on these factors and other risks that may affect the Company's business is included in filings it makes with the Securities and Exchange Commission from time to time, including its Form 10-K for the year ended December 31, 2013 and in our other SEC filings. The Company assumes no obligations to update these forward looking statements.

ALLEGION PLC

Condensed and Consolidated Income Statements

(in millions, except per share data)

 

UNAUDITED

 
Three Months Ended March 31,
2014   2013
 
Net revenues $ 472.5 $ 473.3
Cost of goods sold   280.6     287.2  
Gross profit 191.9 186.1
 
Selling and administrative expenses   125.1     117.3  
Operating income 66.8 68.8
 
Interest expense 13.1 0.4
Other, net   (0.2 )   7.5  
Earnings before income taxes 53.9 60.9
 
Provision for income taxes   16.3     19.7  
Earnings from continuing operations 37.6 41.2
 
Discontinued operations, net of tax   (0.2 )   (0.2 )
 
Net earnings 37.4 41.0
 

Less: Net earnings (loss) attributable to noncontrolling interests

  1.8     1.6  
 
Net earnings attributable to Allegion plc $ 35.6   $ 39.4  
 
Amounts attributable to Allegion plc shareholders:
Continuing operations $ 35.8 $ 39.6
Discontinued operations   (0.2 )   (0.2 )
Net earnings $ 35.6   $ 39.4  
 

Basic earnings (loss) per ordinary share attributable to Allegion plc shareholders:

Continuing operations $ 0.37 $ 0.41
Discontinued operations        
Net earnings $ 0.37   $ 0.41  
 

Diluted earnings (loss) per ordinary share attributable to Allegion plc shareholders:

Continuing operations $ 0.37 $ 0.41
Discontinued operations        
Net earnings $ 0.37   $ 0.41  
 
Shares outstanding - basic 96.3 96.0
Shares outstanding - diluted 97.4 96.0
 

ALLEGION PLC

Condensed and Consolidated Balance Sheets

(in millions)

   

UNAUDITED

 
March 31, 2014 December 31, 2013
ASSETS
Cash and cash equivalents $ 205.4 $ 227.4
Restricted cash 40.1 40.2
Accounts and notes receivables, net 284.1 266.1

Costs in excess of billings on uncompleted contracts

143.8 158.8
Inventory 167.2 155.8
Other current assets   73.3     74.9  
Total current assets 913.9 923.2
Property, plant and equipment, net 208.9 203.0
Goodwill 507.1 504.9
Intangible assets, net 143.5 146.1
Other noncurrent assets   204.5     202.7  
Total assets $ 1,977.9   $ 1,979.9  
 
LIABILITIES AND EQUITY
Accounts payable $ 213.6 $ 211.3
Accrued expenses and other current liabilities 177.3 207.3

Short-term borrowings and current maturities of long-term debt

  70.5     71.9  
Total current liabilities 461.4 490.5
Long-term debt 1,264.4 1,272.0
Other noncurrent liabilities   280.4     273.1  
Equity   (28.3 )   (55.7 )
Total liabilities and equity $ 1,977.9   $ 1,979.9  
 

ALLEGION PLC

Condensed and Consolidated Cash Flows

(in millions)

 

UNAUDITED

 

Three Months Ended
March 31,

2014   2013
Operating Activities    
Earnings from continuing operations $ 37.6 $ 41.2
Goodwill impairment charge
Depreciation and amortization 12.2 11.7
Changes in assets and liabilities and other non-cash items   (50.5 )   (52.3 )
Net cash from (used in) operating activities of continuing operations (0.7 ) 0.6
Net cash used in operating activities of discontinued operations   (0.2 )   (0.2 )
Net cash from (used in) operating activities (0.9 ) 0.4
 
Investing Activities
Capital expenditures (9.2 ) (5.3 )
Acquisitions of businesses, net of cash acquired (5.3 )
Other investing activities, net   0.2     1.2  
Net cash used in investing activities (14.3 ) (4.1 )
 
Financing Activities
Net debt proceeds (repayments) (8.0 ) 1.7
Dividends paid to ordinary shareholders (7.2 )
Net transfers from Ingersoll-Rand 19.3
Other financing activities, net   11.8     (2.8 )
Net cash from (used in) financing activities (3.4 ) 18.2
 
Effect of exchange rate changes on cash and cash equivalents   (3.4 )   (18.2 )
Net decrease in cash and cash equivalents (22.0 ) (3.7 )
Cash and cash equivalents - beginning of period   227.4     317.5  
Cash and cash equivalents - end of period $ 205.4   $ 313.8  
 

SUPPLEMENTAL SCHEDULES

 

ALLEGION PLC

SCHEDULE 1

 

SELECTED OPERATING SEGMENT INFORMATION

(in millions)

 
Three Months Ended March 31,
2014   2013
Net revenues
Americas $ 345.4 $ 351.3
EMEIA 105.1 100.7
Asia Pacific   22.0     21.3  
Total net revenues $ 472.5   $ 473.3  
 
Operating income (loss)
Americas $ 86.0 $ 82.4
EMEIA (1.2 ) (5.4 )
Asia Pacific (3.0 ) (1.1 )
Corporate unallocated   (15.0 )   (7.1 )
Total operating income $ 66.8   $ 68.8  
 

ALLEGION PLC

SCHEDULE 2

 

RECONCILIATION OF GAAP TO NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

 

(in millions, except per share data)

 
The Company has presented revenue, operating income, operating margin, earnings from continuing operations, diluted earnings per share (EPS) from continuing operations, on both a U.S. GAAP basis and on an adjusted basis and presented adjusted EBITDA and adjusted EBITDA margin because the Company's management believes it may assist investors in evaluating the Company's on-going operations as a standalone public company. Adjustments to revenue, operating income, operating margin, earnings and diluted EPS from continuing operations and EBITDA include items that are considered to be unusual or infrequent in nature such as restructuring charges and one-time separation costs related to the spin-off from Ingersoll Rand.
 
The Company considers these items unrelated to its core, on-going operating performance, and believes the use of these non-GAAP measures allows comparison of operating results that are consistent over time. The Company believes these non-GAAP disclosures provide important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. Management uses these non-GAAP measures internally to evaluate the performance of the business. Investors should not consider these non-GAAP measures as alternatives to the related GAAP measures.
 
  Three months ended March 31, 2014   Three months ended March 31, 2013
Reported  

Spin-off
related and
other charges

 

Adjusted
(non-GAAP)

  Reported  

Spin-off
related and
other charges

 

Adjusted
(non-GAAP)

Net revenues $ 472.5 $ $ 472.5 $ 473.3 $ (17.7 )

(1)

$ 455.6
 
Operating income 66.8 $ 9.3

(2)

76.1 68.8 $ 4.5

(2)

73.3
Operating margin 14.1 % 16.1 % 14.5 % 16.1 %
 
Earnings before income taxes 53.9 9.3 63.2 60.9 4.5 65.4
Provision for income taxes   16.3     2.7

(3)

  19.0     19.7     1.3  

(3)

  21.0  
Earnings from continuing operations 37.6 6.6 44.2 41.2 3.2 44.4
 
Non-controlling interest   1.8       1.8     1.6         1.6  
 

Net earnings from continuing operations attributable to Allegion plc

$

35.8

  $ 6.6 $ 42.4   $ 39.6   $ 3.2   $ 42.8  
 
           

Diluted earnings per ordinary share attributable to Allegion plc shareholders:

$ 0.37   $ 0.07 $ 0.44   $ 0.41   $ 0.04   $ 0.45  
 
(1)   Adjustment to net revenue for the three months ended March 31, 2013 reflects the impact of a change in order flow through the Company's consolidated joint venture in Asia resulting from a revised joint venture operating agreement signed in late 2013. Previously, the joint venture acted as a pass-through to the end customer. Products are now shipped direct to the end customer with the joint venture receiving a royalty in an amount that approximates the lost margin. The consolidated joint venture no longer recognizes the revenue and cost of goods sold on these products. The change did not have a material impact on operating income or on cash flows for the three months ended March 31, 2014.
(2) Adjustments to operating income for the three months ended March 31, 2014 and March 31, 2013 consist of $9.3 million of costs incurred as part of the spin-off from Ingersoll Rand and restructuring charges in 2014 and $4.5 million of restructuring charges incurred in 2013.
(3) Adjustments to the provision for income taxes for the three months ended March 31, 2014 and March 31, 2013 consist of $2.7 million and $1.3 million, respectively, of tax expense related to the items excluded from operating income discussed above.
 

ALLEGION PLC

   

SCHEDULE 3

 

RECONCILIATION OF GAAP TO NON-GAAP REVENUE AND OPERATING INCOME BY REGION

 

(in millions)

 
Three Months Ended

March 31, 2014

Three Months Ended

March 31, 2013

As Reported   Margin As Reported   Margin
Americas
Net revenues (GAAP) $ 345.4 $ 351.3
Impact of Asia JV order flow change       (17.7 )
Adjusted net revenues $ 345.4 $ 333.6
 
Operating income (GAAP) $ 86.0 24.9 % $ 82.4 24.7 %
Restructuring charges % 0.1 0.0 %
Spin-off related charges   0.2   0.1 %     %
Adjusted operating income 86.2 25.0 % 82.5 24.7 %
Depreciation and amortization   6.2   1.8 %   6.0   1.8 %
Adjusted EBITDA $ 92.4   26.8 % $ 88.5   26.5 %
 
EMEIA
Net revenues (GAAP) $ 105.1 $ 100.7
 
Operating income (GAAP) $ (1.2 ) (1.1 )% $ (5.4 ) (5.4 )%
Restructuring charges 0.4 0.3 % 4.4 4.4 %
Spin-off related and other charges   1.4   1.3 %     %
Adjusted operating income 0.6 0.5 % (1.0 ) (1.0 )%
Depreciation and amortization   4.4   4.2 %   4.7   4.7 %
Adjusted EBITDA $ 5.0   4.7 % $ 3.7   3.7 %
 
Asia Pacific
Net revenues (GAAP) $ 22.0 $ 21.3
 
Operating income (GAAP) $ (3.0 ) (13.6 )% $ (1.1 ) (5.2 )%
Spin-off related charges   0.1   0.4 %      
Adjusted operating income (2.9 ) (13.2 )% (1.1 ) (5.2 )%
Depreciation and amortization   0.2   0.9 %   0.3   1.4 %
Adjusted EBITDA $ (2.7 ) (12.3 )% $ (0.8 ) (3.8 )%
 
Corporate
Operating income (GAAP) $ (15.0 ) $ (7.1 )
Spin-off related charges   7.2      
Adjusted operating income (7.8 ) (7.1 )
Depreciation and amortization   1.4     0.7  
Adjusted EBITDA $ (6.4 ) $ (6.4 )
 
Total
Adjusted net revenues $ 472.5 $ 455.6
 
Adjusted operating income $ 76.1 16.1 % $ 73.3 16.1 %
Depreciation and amortization   12.2   2.6 %   11.7   2.6 %
Adjusted EBITDA $ 88.3   18.7 % $ 85.0   18.7 %
 

ALLEGION PLC

 

SCHEDULE 4

 

RECONCILIATION OF CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO AVAILABLE CASH FLOW AND NET INCOME TO ADJUSTED EBITDA

 

(in millions)

 

Three Months Ended
March 31,

2014   2013
Net cash provided by (used in) operating activities $ (0.9 ) $ 0.4
Capital expenditures   (9.2 )   (5.3 )
Available cash flow $ (10.1 ) $ (4.9 )
 

Three Months Ended
March 31,

2014 2013
Net earnings $ 37.4 $ 41.0
Provision for income taxes 16.3 19.7
Interest expense 13.1 0.4
Depreciation and amortization   12.2     11.7  
EBITDA 79.0 72.8
 
Discontinued operations 0.2 0.2
Other, net (0.2 ) 7.5

Restructuring charges, spin-off related costs and other expenses

  9.3     4.5  
Adjusted EBITDA $ 88.3   $ 85.0  
 

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
The principles behind DevOps are not new - for decades people have been automating system administration and decreasing the time to deploy apps and perform other management tasks. However, only recently did we see the tools and the will necessary to share the benefits and power of automation with a wider circle of people. In his session at DevOps Summit, Bernard Sanders, Chief Technology Officer at CloudBolt Software, explored the latest tools including Puppet, Chef, Docker, and CMPs needed to...
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
DevOps is not just last year’s buzzword. Companies with DevOps practices are 2.5x more likely to exceed profitability, market share, and productivity goals. But how do you enable high performance? What can you do right now to start? Find out from DevOps experts including Gene Kim, co-author of "The Phoenix Project," and the Dynatrace Center of Excellence.
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Avere delivers a more modern architectural approach to storage that doesn’t require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbuilding of data centers ...
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 ad...
Recognizing the need to identify and validate information security professionals’ competency in securing cloud services, the two leading membership organizations focused on cloud and information security, the Cloud Security Alliance (CSA) and (ISC)^2, joined together to develop an international cloud security credential that reflects the most current and comprehensive best practices for securing and optimizing cloud computing environments.
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.